Vereit CEO: Goal is to Increase the Value of Cole
Vereit (NYSE: VER), the publicly-traded real estate investment trust and parent company of Cole Capital, released its earnings results for the second quarter of 2017.
Cole currently sponsors and manages five publicly registered, non-traded REITs, three of which have ongoing public offerings: Cole Credit Property Trust V, Cole Office & Industrial REIT, and Cole Real Estate Income Strategy, a daily NAV REIT.
On the company’s Thursday earnings call, Vereit CEO Glenn Rufrano discussed whether VEREIT plans to sell Cole to a third party in the future and how the selling agreements with Cetera and Advisor Group are faring.
“Our goal has continued to be to reestablish and increase the value of Cole. We believe we’ve done a really good job of that and we continue to do that,” Rufrano responded. “The critical issues this year have been bringing Cetera and Advisor Group on – two very large companies who are now just beginning to sell.”
Cetera recently began marketing Cole Real Estate Income Strategy and have increased sales over the last few months. Cetera also approved Cole Credit Property Trust V and Cole Office & Industrial REIT and the company “hopes to see some benefit to that at the tail end of the year.”
Advisor Group increased sales of Cole Credit Property Trust V over the last few months and will begin their due diligence on the other two REITs soon, Rufrano noted.
“As we look at reestablishing that value, we’ll then think about what we do with Cole whether it’s internal or external,” said Rufrano. “Our goal is to increase value. We’ll then decide whether the market is valuing it properly.”
Vereit is formerly known as American Realty Capital Properties Inc. but changed its name and severed ties to the legacy firm following an accounting scandal in October 2008. The company’s former CFO, Brian Block, was recently charged with securities fraud for his role in the ordeal.
Following the trial, a group of investment funds affiliated with Blackstone Strategic Opportunity Associates and Fir Tree Partners filed a lawsuit against the company. The company is required to respond to the complaint by August 17th.
Legal expenses related to the matters arising from the ARCP scandal were approximately $14.4 million for the second quarter, bringing the year-to-date amount to $27 million.
During the second quarter, Cole raised $114.5 million of capital on behalf of its sponsored non-listed REITs, including $36.5 million through the Cole REITs’ distribution reinvestment plans, compared to $174.1 million, including $35.5 million of DRIP proceeds, in the second quarter of 2016.
Last month, Cole raised $34.1 million of capital on behalf of the Cole REITs, including $11.9 million through DRIP.
Revenue reached $28.7 million during the second quarter, compared to $27.1 million in the first quarter of 2017 and $32.5 million year-over-year.
Net income was $4.5 million for the second quarter of 2017, compared to $2.0 million in the previous quarter and $1.1 million year-over-year.
Cole invested $276.7 million in 45 properties on behalf of the REITs in the second quarter of 2017, compared to $211.2 million in 14 properties in the second quarter of 2016.
VEREIT, full-service real estate operating company, manages $7.7 billion of gross real estate investments on behalf of the Cole Capital non-traded REITs.
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